Inside Health

Bush Officials Spell Out Cuts in Money for Housing

By ROBERT PEAR

Published: February 4, 2005

Facing the prospect of record deficits, Bush administration officials laid out proposals on Thursday for deep cuts in spending on housing and community development.

At the same time, the nation's top health official fleshed out proposals to cut $60 billion from the projected growth of Medicaid, the federal-state health program for low-income people, in the next decade.

But the official, Michael O. Leavitt, the new secretary of health and human services, said 12 million to 14 million people could gain health insurance if Congress approved President Bush's proposals to provide tax credits for such coverage and helped small businesses band together to buy coverage.

Donald L. Evans, the commerce secretary, and Alphonso R. Jackson, the secretary of housing and urban development, said Mr. Bush wanted to consolidate 18 local assistance programs scattered among five departments into one new grant program, to be run by the Commerce Department.

The government is now spending more than $5.6 billion a year on the 18 programs, which include the Community Development Block Grant, a lifeline for many impoverished urban neighborhoods. For the new program, Mr. Bush will request $3.7 billion, a cut of about 33 percent.

''The current system forces communities to navigate a maze of federal departments, agencies and programs, each imposing a separate set of standards and reporting requirements,'' Mr. Jackson said. The programs, he said, ''duplicate and overlap one another and have different eligibility criteria,'' with little accountability for the way money is used.

But Jim Hunt, a city councilman in Clarksburg, W.Va., who is first vice president of the National League of Cities, said the president's proposal would have ''a dire negative impact on cities of all sizes.'' For three decades, Mr. Hunt said, cities have used the federal money to create jobs, stimulate private investment and revitalize distressed communities.

Sherry Conway Appel, a spokeswoman for the league, said, ''We want the Community Development Block Grant to remain a separate and distinct program,'' with no reduction in its budget.

Don Plusquellic, the mayor of Akron, Ohio, who is president of the United States Conference of Mayors, said: ''The new proposal in unconscionable. It will cut programs that help the poorest and the neediest.''

Mr. Plusquellic, a Democrat who has led his city for 18 years, said the reshuffling of federal programs obscured the likely effects. ''It would be more honest if the federal government simply said, 'We don't care about these poor people,''' he said.

A summary of the proposal, prepared by the White House Office of Management and Budget, says Mr. Bush believes that communities must not ''rely on perpetual federal assistance.''

The Department of Housing and Urban Development, which now runs the Community Development Block Grant, said the program provided $393 million this year to New York State, including $207 million for New York City, $17.6 million for Nassau County and $10.9 million for Rochester. New Jersey gets $113 million, and Connecticut $46.6 million.

Under the same program, Chicago is receiving a grant of $95.5 million, while Los Angeles is getting $82.8 million and Houston is getting $34.2 million, the department said.

The proposal could face bipartisan resistance in Congress, because lawmakers take pride in earmarking some of the money for hometown projects.

Bush administration officials said the community development program was poorly focused. Eligibility for the new grant program will be based on factors like poverty and unemployment levels.

Among the programs that would be folded into the new initiative is the Community Services Block Grant, which helps pay for community action agencies begun more than 35 years ago as part of what was called the war on poverty. These agencies provide a wide range of housing, nutrition, education and employment services to low-income people.

Mr. Bush said in his State of the Union address on Wednesday that his budget, to be unveiled on Monday, would reduce or eliminate more than 150 government programs. White House officials said the new blueprint for federal spending would be the tightest budget since Mr. Bush took office in 2001.

Other programs to be consolidated under the president's plan include urban and rural empowerment zones, a program to foster development of contaminated industrial sites and a pot of money known as the Community Development Financial Institutions Fund, run by the Treasury.

The White House predicted last week that the federal budget deficit would rise to $427 billion this year, from $412 billion last year. If Congress adopts his proposals, Mr. Bush says, the deficit will be less than $260 billion in 2009.

Mr. Leavitt, the health secretary, said the president's budget would crack down on the ability of middle-income families to get Medicaid coverage for nursing home costs, which average more than $55,000 a year.